JAMES MANUEL HO AND ANOTHER v. GRAND PACIFIC VACATION (HONG KONG) LTD

HCSA 5/2004

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

SMALL CLAIMS TRIBUNAL APPEAL NO. 5 OF 2004

(ON APPEAL FROM SMALL CLAIMS TRIBUNAL CLAIM NO. 61090 OF 2003)

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R E A S O N S  F O R  D E C I S I O N

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Introduction

1.  The applicant was the defendant in SCTC 61090 of 2003.  The Small Claims Tribunal (“the Tribunal”) made an award on 12 January 2004 ordering the applicant to pay $26,960 with interest and costs to the 2 claimants.  Aggrieved by that award, on 27 January 2004, the applicant applied to this court for leave to appeal against the award.  The application was purportedly taken out pursuant to s. 28(1)(a), Small Claims Tribunal Ordinance (Cap. 338) which reads:-

“Any party who is aggrieved by a decision of [the Tribunal] … on any ground involving a question of law alone”.

2.  At the end of the hearing, I refused this application, indicating reasons for decision would be handed down later.  They are as follows.

Summary of the Grounds of Application

3.  The grounds of application were amended on 10 June 2004.  In total 4 grounds were put forth: the first 2 related to an alleged failure on the Tribunal’s part to assess, evaluate and consider parts of the evidence placed before it whereas the other 2 related to an alleged failure on the Tribunal’s part to investigate into certain matters.  The duty “to investigate” is said to arise from s. 16(3), Cap. 338 which provides:-

“[The Tribunal] shall inquire into any matter which it may consider relevant to a claim, whether or not it has been raised by a party”.

Summary of the Tribunal’s Award

4.  To better understand this application, the Tribunal’s award needs to be briefly mentioned.

5.  The Tribunal’s brief reasons for decision state that the claim arose from the sale of a time-sharing scheme.  The 2 claimants are a married couple.  They signed 2 purchase agreements, one on 3 October 2001 and the other on 20 October 2001.  Their claim in the Tribunal was for the refund of the price they paid pursuant to the agreements.

6.  The Tribunal was acutely aware of the significance of the second agreement to the claim.  This is because the applicant contended in the Tribunal (among other things) that the claimants had affirmed the agreements; the execution of the second agreement being relied upon as evidence of the act of affirmation.

7.  The background facts (as found by the Tribunal) can be summarised as follows.  Sometime before 3 October 2001, the applicant made an unsolicited call to the claimants and invited them to collect a prize for free hotel accommodation.  In fact, that was part of the applicant’s sales strategy for promoting the sale of time-shares in a scheme known as “Multiple Travel Club” based in Thailand (“MTC”).  The Tribunal observed that the applicant might have contravened s. 74, Securities Ordinance (Cap. 333) (now repealed) but nothing turns on this in this application.

8.  The claimants attended the meeting on 3 October 2001 which was in fact a sales presentation.  It lasted for a relatively long time.  The Tribunal found there were misrepresentations and that the claimants’ will had been sapped by the lengthy presentation.  One of the misrepresentations was related to the number of MTC holiday resorts available for use by the claimants.

9.  The applicant’s conduct after the 2^nd claimant entered the 1^st agreement was found to be irresponsible: the promised air ticket discount benefit was not honoured.  The applicant’s evidence adduced before the Tribunal regarding this matter has been disbelieved and rejected by the Tribunal.

10.  On 15 October 2001, the applicant also persuaded the claimants to write a letter to the applicant stating that they were unable to continue with their payments under the 1^st agreement.  The Tribunal considered this to be a trick.

11.  The Tribunal rejected the claimants’ contention that the agreements were entered into under economic duress in that the applicant threatened to sue them.  The Tribunal so concluded because such a threat cannot in law be a duress: Chitty on Contracts (1999), para. 7-005.  However, it accepted the claimants were under tremendous pressure and were worried.  The claimants entered into the 2^nd agreement on 20 October 2001 under protest.

12.  With the above matters in mind, the Tribunal considered whether the agreements were unconscionable contracts within the meaning of the Unconscionable Contracts Ordinance (Cap. 458) and found that they were.  The Tribunal also concluded, after taking into various matters, that the appropriate relief was a refusal to enforce the agreements and an order for the full refund of the sum earlier paid.

The “Duty to Investigate” Ground

13.  This is related to s. 16(3), Cap. 338: see para. 3 above.  This ground of application has been raised in many other applications for leave to appeal against the Tribunal’s decisions (and against the decisions of the Labour Tribunal, relying on a similar provision: s. 20(3), Labour Tribunal Ordinance (Cap. 25)).  Examples of judgment concerning this ground are:-

(1)	Le Thi Bich Thuy Kitty v. Sheraton International (Hong Kong) Ltd. trading as Sheraton Hong Kong Hotel and Towers HCLA 34/2004;
(2)	Chan Suk Bing Angie v. Harbour Phoenix [1992] 2 HKC 459;
(3)	謝林與陳德偉 HCLA 150/1995;
(4)	王焯華 v. Five Star Wine Ltd. HCLA 35/2001;
(5)	沈慧玉 v. Ailec International (Hong Kong Ltd.) HCLA 122/2002;
(6)	Tong Pun Chung v. Top Express Engineering Ltd.HCLA 71/2002；
(7)	Poon Ping Kwong v. Wah Hip Engineering Co. Ltd. HCLA 130/2002;
(8)	Ng Ming v.Cheung Wah Investment Co. Ltd. HCLA 10/2003;
(9)	Siu Koon Fung v.Shun Shing Construction HCLA 1/2002.

14.  The extent to which the duty imposed on the Tribunal by Cap. 338 to inquire must depend on the individual circumstances of each case.  However, the following legal principles can be gathered from the relevant judgments:-

(a)	the duty to inquire is limited to a duty to inquire into any matter “which it may consider relevant to a claim”;
(b)	the duty is not absolute;
(c)	not every failure to inquire a relevant matter gives rise to a valid ground of appeal.  The failure must be of such a nature that it gives rise to injustice in that a fair and proper determination cannot be attained;
(d)	“matter … relevant to a claim” can cover matters of various degrees of relevance to a claim.  The Tribunal has no duty to inquire into all matters of relevance irrespective of whether they have a reasonable basis;
(e)	the manner of investigation is a matter of discretion for the Tribunal dependent on the facts of the case before it.  The appellate court should not interfere with that discretion merely because it would have exercised it in a different manner.  Regard can be taken of matters such as the issues in dispute, the incontrovertible evidence before the Tribunal and materials placed before the Tribunal by the parties prior to the trial before the Tribunal;
(f)	on the other hand, the duty to inquire does not mean the Tribunal should take over the role of an advocate for a litigant.  The Tribunal must remain neutral and impartial.  Thus, litigants must still be allowed to cross-examine witnesses for the other side, and litigants cannot be compelled to testify against their wishes.  But the Tribunal has a duty to invite litigants to consider giving evidence when it is apparent he could give evidence on important matters in issue;
(g)	the duty to inquire can include the Tribunal inviting the parties to comment on matters, or, if necessary, directing them to produce evidence or documents, relating to matters which the Tribunal discerns to be important.

15.  In this application, the applicant complained that the Tribunal failed to investigate into the following matters:-

(1)	when the claimants found out that the applicant misrepresented the truth;
(2)	evidence about the number of MTC holiday resorts available to the claimants and the applicant’s belief as regards such matter;
(3)	evidence relating to the applicant’s policy about the air ticket discount benefit;
(4)	whether the individuals alleged by the claimants to be the defendant’s agents were acting within the scope of their authority;
(5)	facts relevant to whether the claimants’ allegation that the defendant failed to provide discounted air tickets such as how many times the claimants requested for such tickets and how the defendant’s prices compared to other prices.

16.  I do not regard any of the above matters to constitute a valid complaint.  For example, in relation to para. 15(1) above, as stated earlier, the Tribunal was fully aware of the defendant’s argument about the claimants’ having affirmed the agreements, and expressly dealt with it in the reasons for decision: see, for example, para. 33 and 34 thereof.

17.  In relation to para. 15(2) above, the point was in fact already raised by the claimants.  As such, the burden (at least an evidential burden) was on the applicant to refute it; there is usually no need for the Tribunal to prompt litigants to refute matters already raised by the other side.  In fact, the Tribunal may be put in an impossible position if it were invariably required to do so.  If the Tribunal asks a litigant what his reply to such a matter is, this can give rise to various kinds of complaint, such as the Tribunal is trying to unfairly assist one party, or unfairly questioning that party (depending on who happens to be the aggrieved party).

18.  The same reasoning applies to para. 15(3) and (5) above.

19.  As regards para. 15(4) above, there was no basis for the Tribunal to think that there could be a lack of authority.  In any event, the facts relating to the claim were that the individuals in question were tasked by the applicant to deal with the claimants.  In view of the decisions in cases such as Wong Wai Hing and another v. Hui Wei Lee [2001] 2 HKLRD 736, Tullett & Tokyo International Ltd. v. APC Securities Co. Ltd., CACV 201/2000 and The Ming An Insurance Co. (HK) Ltd. v. The Ritz-Carlton Ltd. [2002] HKCFAR 42, there is no substance at all in this complaint.  Further, in the factual context of this application, to require the Tribunal to inquire into such a matter would amount to asking it to help the applicant make up a new defence even when there was no basis for doing so.

20.  Further to the above, the Tribunal’s duty to inquire under s. 16(3), Cap. 338 has to be considered in its proper context.

21.  It has to be borne in mind that the Tribunal is not, and is not expected to be, the legal representative of any litigant.  This difference in role necessarily makes the Tribunal’s task under s.16(3) (at least potentially) more difficult than the job of a party’s legal representative.  First, it does not have the time and resources to conduct a full-scale investigation into the merits of that party’s case.  It is also handicapped in not being able to communicate privately with one litigant in the absence of the other.  For this reason, the Tribunal’s inquiry must be made without risking the exposure of what may otherwise be privileged information.

22.  On the other hand, legal representatives retained in contentious matters have a duty to conduct their client’s case with reasonable competence.  In fact, the incompetence of counsel has from time to time been raised as a ground of appeal.  The Court of Final Appeal has made the following observations in Chong Ching Yuen v. HKSAR [2004] 7 HKCFAR 247:-

“Certainly defence incompetence can cause or contribute to the creation of a state of affairs in which a conviction has to be regarded as unsafe or unsatisfactory. … But it should be clearly understood that appellate courts will approach those situations with a sense of realism, and not in such a way as would put a premium on briefing incompetent defence counsel at trial and then criticising them on appeal in the event of a conviction …

As one would expect and experience confirms, levels of ability vary from counsel to counsel and, moreover, no counsel performs at an unvarying standard. Just because an act or omission or even a series of acts and omissions on the part of a defence counsel can be characterised as incompetent, it does not necessarily follow that the same is to be regarded as having rendered a conviction unsafe or unsatisfactory …

In determining whether defence incompetence has rendered a conviction unsafe or unsatisfactory our appellate courts should, in my view, focus firmly on the standard of trial that our system insists upon. …

I have arrived at a ‘fair trial’ criterion essentially on principle. But I have not disregarded the decided cases. Various formulations are to be found in them … ” (emphasis supplied)(para. 8 to 11, per Bokhary PJ);

“The Hong Kong and overseas cases helpfully collected in the judgment of the Court of Appeal delivered by Fuad VP in R v. Mo Lee-keun [1993] 1 HKCLR 78 disclose a tendency on the part of judges to use an adjective such as "flagrant" to indicate the sort of defence incompetence that necessitates the quashing of a conviction. This is quite natural since it is unlikely that anything short of a very high degree of defence incompetence would ever reduce or contribute to reducing a trial to something less than a fair trial. Nevertheless it has to be borne in mind that the appellate court is concerned with what impact defence incompetence had on the trial, and not with whether or how severely defence counsel deserves to be criticised” (emphasis supplied) (para. 15, Bokhary PJ);

“Nevertheless the courts have recognized that in some exceptional instances, an error of sufficient proportion and consequence will enable the court to intervene and avert a miscarriage of justice. To describe this ground, the expression "flagrant incompetence" has generally been used, see for example R v. Mo Lee-kuen [1993] 1 HKCLR 78; HKSAR v. Wong Chi-keung & Others, Cr App No. 585 of 1996, 3 July 1998; R v. Lau Sui Fu [1997] HKLRD 323; HKSAR v. Au Yeung Long & Another, CACC No. 522 of 1998, 11 June 1999 … The expression "flagrant incompetence" rightly underlines an appellant's need to show much more than a mistake, an error of judgment, or a decision to follow one course when in hindsight another would have been preferable. But it should not deflect attention from the most critical point, namely given that there was a significant error of some kind, what will be decisive is the effect of the error on the trial. As Lord Steyn said, in delivering the judgment of the Privy Council in Boodram v. The State [2002] 1 Cr App R 103:

‘...the general principle requires the court to focus on the impact of the faulty conduct.’ (at p.118)

The bottom line is that to succeed, an appellant must be able to show he or she received less than a fair trial … ” (emphasis supplied)(para. 49, per Sir Thomas Eichelbaum NPJ).

Whilst the Court of Final Appeal’s above observations were made in an entirely different context, the underlying criterion is the same. 

23.  Cap. 338, especially s. 16(3), must intend that hearings in the Tribunal, although conducted in an informal setting, should be conducted in a fair manner.  Because legal representation is not permitted, the Tribunal should be more proactive during the hearing; hence the departure from the traditional adversarial approach in litigation where the court acts essentially as an umpire.  However, I do not consider s. 16(3), Cap. 338 to intend to cast on the Tribunal a burden any higher than that cast upon a litigant’s legal representative.  In this connection, I note that s. 16(3) provides that the Tribunal is to inquire into any matter “which it may consider relevant to the claim”.  This clearly confers on the Tribunal a duty which is discretionary in nature.  The appellate court’s power of interference with the manner in which the lower court exercises its discretion is well known and needs not be repeated.

The “Failure to Properly Assess Evidence” Ground

24.  I shall be very brief about this.  The part of this application falling within this heading complained that the Tribunal failed to properly assess, evaluate or consider the following matters:-

(a)	the claimants were induced by material misrepresentations to enter into the agreements;
(b)	the claimants have affirmed the agreements by continuing to make instalment payments (up to November 2001) and by booking air tickets (as late as May 2002);
(c)	in finding that the agreements were unconscionable contracts;
(d)	in finding that the applicant acted irresponsibly, inconsistently and unfairly in relation to the promised air ticket discount benefit;
(e)	in finding that the claimants had little local knowledge, were under tremendous pressure and were not of equal bargaining power as the applicant.

25.  These complaints are in truth complaints against the Tribunal’s findings of fact.

26.  The appellate courts do not lightly interfere with findings of fact made by the first instance courts.  As the court of appeal said in the judgment in Chan Wai Sun and Another v. Law Shiu Kai Andrew CACV 18/2004:-

“… Chan gave an explanation for not raising the topic, an explanation which the judge was entitled to accept.  The judge was also entitled not to give any weight to the alternative case put forward of payment for services rendered.  These were findings of primary fact.  As Lord Hoffmann said in Biogen Inc v Medeva plc [1997] RPC 1 and repeated in Piglowska v Piglowski [1999] 1 WLR 1360:

‘The need for appellate caution in reversing the trial judge’s evaluation of the facts is based upon much more solid grounds than professional courtesy.  It is because specific findings of fact, even by the most meticulous judge, are inherently an incomplete statement of the impressions which was made upon him by the primary evidence.  His expressed findings are always surrounded by a penumbra of imprecision as to emphasis, relative weight, minor qualification and nuance .... of which time and language do not permit exact expression, but which may play an important part in the judge’s overall evaluation’.

To this, Bokhary PJ added in Ting Kwok Keung v Tam Dick Yuen [2002] 1 HKC 601: 

‘Where the judgment turns on an issue of fact, the Court of Appeal must have regard to the nature of that issue of fact.  And it must have regard to the advantages enjoyed by a trial judge who received the evidence on such an issue at first-hand, in other words, in whose presence the whole of the evidence unfolded in its living state.  Such advantages can be, as Lord Shaw of Dunfermline put it in Clarke v Edinburgh Tramways at p.36, ‘sometimes broad and sometimes subtle’.  The question for the Court of Appeal is whether, even though it does not enjoy the advantages enjoyed by the trial judge who received the evidence at first-hand, it is nevertheless satisfied that his conclusion on the facts is plainly wrong.  The Court of Appeal should intervene if so satisfied.  But if not so satisfied, the Court of Appeal should defer to the trial judge’s conclusion even if in some doubt as to its correctness’” (emphasis supplied) (para. 91).

27.  As regards appeals from the Tribunal, s. 28(1)(a), Cap. 338 lays down an even more stringent test.

28.  In relation to each of the matters complained of, the Tribunal was entitled to reach the conclusions it reached, because there was evidential basis to do so.  Whether another tribunal or court will reach the same conclusions is immaterial.  There is also no detectable error in the manner in which the Tribunal reached the conclusions.

Application to Adduce Fresh Evidence

29.  The applicant relied on RHC Ord. 55 r. 7(2) which provides:-

“The Court shall have power to receive further evidence on questions of fact … ”.

30.  The fresh evidence was documents which were said to relate to the Tribunal’s finding that there was no evidence about the applicant’s system or policy to make available the air ticket discount benefit.

31.  It can be inferred that those documents were in the applicant’s possession at the time of the Tribunal hearing.  The only explanation put forth to explain why they were not produced then was in short that the applicant was unaware they were relevant.  Moreover, the claimants had expressly complained about the air ticket discount benefit (the applicant fairly accepted it had in fact been raised in the claim form).  The applicant must have been well aware of the existence of these documents much earlier than the Tribunal hearing.  The assertion in the affirmation that the applicant was unaware of their significance is not believable.

32.  In the above circumstances, I do not consider there is sufficient reason to exercise my discretion in the applicant’s favour.